Open Mind, Flexibility Always Helps

In 1990, Arco International made a technical review of the blocks offered in the Oriente of Ecuador, and offered a bid on Block 10. Arco was successful in its bid, and became operator with a 60 percent interest, and had Agip as partner, with 40 percent.

Geologic studies and seismic interpretation indicated that the 500,000 acres of Block 10 had four significant structures:

  • A very large compressional anticline on the west side.
  • Three low relief intra-basinal structures.

The largest feature, the Villano anticline, had a Royal Dutch/Shell dry hole on the crest.

Arco's review indicated that that well, the Shell Villano #1, was the final wildcat drilled by Shell in an exploration play that resulted in a series of unsuccessful Shell wildcats drilled along the eastern margin of the Andes in the 1950s. The Shell Villano #1 was abandoned after drilling into the top of the objective Hollin sandstone, and recovering a short core of sandstone with stiff tar.

Arco exploration manager Robert Olson suggested that the Shell wildcat may have only penetrated a thin stringer of tar-bearing Hollin sandstone, above the main Hollin sandstone. Olson thought that the Villano structure deserved another test - a redrill of Villano #1.


To minimize any damage to the rain forest, Arco decided to restrict its exploration to helicopter-supported activities. A wildcat test twinning the Shell Villano dry hole would be very expensive. All the wildcat costs would buy 300 feet of new hole penetration in the twin well.

As a former Shell Oil executive, I was dubious that Royal Dutch/Shell had overlooked a major field, but I agreed that the well evidence was unclear. Olson's exploration team analyzed the basin's source rocks and burial history, and documented that light oils could be expected to be generated and available in the basin.

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In 1990, Arco International made a technical review of the blocks offered in the Oriente of Ecuador, and offered a bid on Block 10. Arco was successful in its bid, and became operator with a 60 percent interest, and had Agip as partner, with 40 percent.

Geologic studies and seismic interpretation indicated that the 500,000 acres of Block 10 had four significant structures:

  • A very large compressional anticline on the west side.
  • Three low relief intra-basinal structures.

The largest feature, the Villano anticline, had a Royal Dutch/Shell dry hole on the crest.

Arco's review indicated that that well, the Shell Villano #1, was the final wildcat drilled by Shell in an exploration play that resulted in a series of unsuccessful Shell wildcats drilled along the eastern margin of the Andes in the 1950s. The Shell Villano #1 was abandoned after drilling into the top of the objective Hollin sandstone, and recovering a short core of sandstone with stiff tar.

Arco exploration manager Robert Olson suggested that the Shell wildcat may have only penetrated a thin stringer of tar-bearing Hollin sandstone, above the main Hollin sandstone. Olson thought that the Villano structure deserved another test - a redrill of Villano #1.


To minimize any damage to the rain forest, Arco decided to restrict its exploration to helicopter-supported activities. A wildcat test twinning the Shell Villano dry hole would be very expensive. All the wildcat costs would buy 300 feet of new hole penetration in the twin well.

As a former Shell Oil executive, I was dubious that Royal Dutch/Shell had overlooked a major field, but I agreed that the well evidence was unclear. Olson's exploration team analyzed the basin's source rocks and burial history, and documented that light oils could be expected to be generated and available in the basin.

Arco decided to drill its first well on Block 10 to test the Moretecocha structure, a simple, low relief closure that was adjacent to the deepest part of the basin. Moretecocha was located just down-plunge from the Villano structure.

If the Moretechoca closure were filled to spill with oil of reasonable gravity, it would be attractive by itself. More importantly, a Moretecocha success made the much larger Villano structure much more likely to have received a charge of moderate gravity oil.

Arco drilled the Moretecocha closure in 1991 and found about 40 million barrels of 24-gravity oil in the Hollin sandstone. More importantly, the Moretecocha closure appeared to be filled to the mapped spill point. Any excess charge should have migrated laterally and up-dip to Villano.

The tar sand originally encountered by the Shell at Villano #1 now seemed to be anomalous.

Bob Olson again recommended twinning Shell's Villano #1; this time I agreed.


The Arco/Agip Villano #2 was spudded in 1992 as a twin to the 1950s Shell Villano #1, and the Villano #2 found a thick porous Hollin sandstone containing 22 degree API oil. The Arco Villano #2 has a flow potential of over 8,000 barrels of oil per day.

Villano field appears to have recoverable reserves of at least 200 million barrels of oil.


Development of Villano field has been extremely difficult - for political, not technical reasons.

Arco tightly controlled the field's development to protect the environment, even to adopting a "no road" policy to minimize incursions into the development area. The surface footprint for field development is only six acres, but it accommodates nine developments and two water injector wells - and necessary facilities.

Some local groups insisted on roads to assist their marketing of produce and timber; other local groups insisted on no roads, with the area to be left as a nature preserve.

Some groups wanted schools and medical facilities; some groups wanted contributions to environmental organizations.

With numerous groups claiming to be the exclusive representative of the local people, and with a central government with legal responsibility but with little local authority, development activity was excruciatingly slow, difficult and expensive.


And what did I learn from this discovery?

  • I think I learned to keep an open mind to new ideas.
  • I think I learned that you can change the perception of risk by lessening technical uncertainties.
  • I think I learned that a weak central government can become a major business risk.

Now, was that the way it really was?

Perhaps not - but that's the way I remember it.

And Now, The End?

A year ago, I promised to write a dozen articles for the EXPLORER with the purpose of using history of discoveries to extract exploration lessons.

There are another dozen stories I could tell, but I am more interested in hearing your stories and learning your lessons.

Please prepare your histories of discoveries for possible publication in the EXPLORER, attention Vern Stefanic, and keep the memories rolling.

Remember that wisdom lets you make different mistakes instead of repeating old mistakes.

I'm going to stop writing and start listening.

Thanks.

- Marlan

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